Solar Plant Subsidy Guide: PM Solar Scheme & MNRE Subsidy
Most electricity bills in Indian cities have one direction only – and that has triggered the recent interest in rooftop solar panels scheme. A solar plant subsidy is precisely what makes this move affordable, as a certain percentage of the installation cost is transferred directly to the applicant’s account in the form of CFA (Central Financial Assistance).
The main scheme currently offering this type of support program is the PM-Surya Ghar: Muft Bijli Yojana or the national solar panel scheme. We take a closer look at the details of the subsidy, eligible categories, and costs in this guide.
Solar Plant Subsidy Overview
The government solar plant subsidy for solar panels under the central scheme is officially called Central Financial Assistance (CFA). It is also mistakenly referred to as MNRE subsidy since the Ministry of New Renewable Energy (MNRE) oversees this program. The MNRE solar plant subsidy directly compensates a portion of the cost of solar rooftop subsidy. This amount is given to the consumer as a cash transfer to their bank accounts after the DISCOM (distribution company) verifies the installation of the solar panel.
Therefore, it is a form of capital assistance to residential consumers to finance the solar subsidy scheme on their premises. It is different from a tax incentive, which would be claimed by the consumer in their income tax return. In contrast to a solar panel government scheme, the CFA is a direct monetary benefit and not a waiver or reduction in electricity bills.
PM-Surya Ghar: Muft Bijli Yojana
This is the popular name of the central solar plant subsidy scheme of the government that was approved in a cabinet meeting on 29 th February 2024. The allocated budget for the scheme is ₹75,021 crore, aiming to facilitate the rooftop solar power plant for one crore households by FY 2026-27. As a central government solar scheme, it is a unified solar yojana that replaces disparate state-level solar subsidy schemes for residential consumers. It operates through a centralized portal, allowing applicants to complete the standard process of selecting an installation agency while also applying for the subsidy.
The PM-Surya Ghar: Muft Bijli Yojana covers group housing societies and RWAs (resident welfare associations) for common solar power plant needs such as lighting in lobbies.
Solar Plant Subsidy: Amount and Eligibility Criteria
For the most popular residential solar power plants ranging from 1 kW to 3 kW, the solar subsidy scheme amount depends on the system size as indicated below.
| System Size | Subsidy Rate | Maximum CFA |
|---|---|---|
| First 2 kW | ₹30,000 per kW | ₹60,000 |
| Additional 1 kW (3rd kW) | ₹18,000 per kW | ₹18,000 |
| 3 kW and above | Capped | ₹78,000 |
According to this MNRE solar plant subsidy schedule, rooftop solar systems with a capacity of 3 kW receive the maximum CFA. On the other hand, solar panel government schemes for the northeast, J&K, Ladakh, Himachal Pradesh, and Uttarakhand have a slightly higher solar subsidy of 33,000 INR/kW and 19,800 INR/kW for the first 2 kW and the additional 1 kW respectively. Some states have local solar subsidies that may be added to the standard CFA, but they differ and are not always available. Therefore, it is best to confirm the details with your DISCOM.
Regarding eligibility, government solar plant subsidy in domestic homes have a more limited scope than many expect. In general, the applicant must meet the following criteria:
- Be an Indian citizen with a domestic electricity connection (in their name)
- Own the home in question with sufficient roof space that is exposed to sunlight
- Not have previously availed the subsidy in the same house
- Install an on-grid solar power plant (with equipment on the ALMM or Approved List of Models and Manufacturers) on their rooftop provided by a DISCOM empanelled entity
- Not be a tenant or have a commercial electricity connection
- Not have opted for an off-grid or hybrid (battery backup) solar power plant
The reason why the last two points are important is because this is a government solar scheme for residential consumers only. Since DISCOMs handle the local verification, the procedures may differ slightly at the state level.
solar plant subsidy: How to Apply
The procedure for this solar plant subsidy may seem involved, but it is much shorter than many realize. The standard application procedure for the rooftop solar subsidy is as follows:
- Register on the National Portal with your mobile number and DISCOM consumer number
- Apply for net-metering feasibility (which is typically automatic for systems of 1 kW – 10 kW)
- Choose the DISCOM empanelled entity and agree on the size and cost of your solar power plant
- Install the solar power plant and apply for a net-meter (the DISCOM inspects the site and issues the commissioning certificate on the National Portal)
- Apply for subsidy by submitting the required documents to the DISCOM (typically, include a canceled cheque or cheque book as proof of a bank account)
- The DISCOM approves the application, and the solar subsidy is transferred directly to the consumer’s bank account within approximately 30 working days of commissioning
Solar Panel Subsidy: Documents Required
Most of the documents for this pm solar scheme are typically already available at hand:
- Photo ID proof (Aadhaar or PAN card)
- Latest electricity bill with the consumer number
- Proof of possession of the property or roof where the solar power plant will be installed
- Bank account details (and a cancelled cheque or passbook)
- A signed net-metering agreement (in some cases)
Confirm the exact list of the documents with your preferred vendor or DISCOM before applying since the requirements may differ.
solar plant subsidy for 1 kW, 2 kW and 3 kW Systems
The solar plant subsidy capacity determines the amount of electricity generated as well as the solar subsidy. Assuming a 1 kW system costs approximately 55,000 INR – 65,000 INR to install, the subsidy would bring the final price to 25,000 INR – 35,000 INR. Similarly, the 2 kW system (roughly 1.1 Lakh INR – 1.3 Lakh INR) with a 60,000 INR subsidy would cost 50,000 INR – 70,000 INR. The 3 kW system is a popular choice among homeowners, and its approximate cost ranges from 1.6 Lakh INR – 1.9 Lakh INR before the 78,000 INR subsidy is applied. These are only indicative figures, so it is advisable to get a couple of quotes before choosing an inverter and a solar panel.
Commercial Solar Plant Subsidy
Business owners often inquire about the Solar Plant Subsidy for 1 MW or commercial solar power plant. However, it is important to note that the central government only provides a MNRE solar subsidy to residential consumers. There is currently no solar subsidy scheme in India for commercial and industrial solar power plants.
That being said, businesses can claim accelerated depreciation of up to 40% of the value of the solar power plant in the first year under the Income Tax Act, Section 32. Additionally, solarised commercial consumers can take advantage of net metering (subject to state-specific regulations) and open access/group captive arrangements.
Other Government Solar Schemes in India
PM-Surya Ghar: Muft Bijli Yojana is not the only government solar scheme in India. The central government’s other solar yojana is PM-KUSUM, which offers a separate solar plant subsidy for farmers and agricultural pump sets. Under the PM-KUSUM solar subsidy scheme, farmers can apply for small-scale ground-mounted solar power plants, standalone solar irrigation pumps, and solarisation of existing pumps. This scheme has a revised outlay that was extended to March 2026, and it is said that another extension was approved recently. The states also have their solar subsidy schemes on occasion. Therefore, it is advisable to determine the most suitable solar panels scheme based on the consumer category.
Solar Subsidy vs Solar Installation Cost
This MNRE Solar Plant Subsidy must be better understood as a reduction in the eligible cost rather than a solar subsidy per se. This rooftop solar subsidy applies to the cost of the main components of the solar power plant, including the modules, inverter, mounting structures, and installation. However, it typically does not cover the cost of additional components beyond the standard ones or battery storage solutions. A good rule of thumb is to estimate the total solar installation cost first and then subtract the amount of the subsidy. Additionally, it is important to keep in mind that the government often revises subsidies for solar panels, so it is best to check the latest figures before applying.
Frequently Asked Questions About Solar Plant Subsidy
Q1: What is the current solar subsidy in India?
Ans: Up to 78,000 INR is the solar plant subsidy for the residential rooftop solar power plant of 3 kW and above. The first 2 kW of the system size is eligible for a 30,000 INR/kW subsidy while the additional 1 kW has a 18,000 INR/kW subsidy. This solar subsidy is directly transferred to the consumer’s bank account.
Q2: Who authorizes the rooftop solar subsidy?
Ans: The MNRE (Ministry of New Renewable Energy) is the overarching body that determines the guidelines for the rooftop solar plant subsidy. In practice, the solar subsidy authority is the REC (Renewable Energy Company Limited) at the national level while the DISCOM (distribution company) handles the verification and other local administrative tasks.
Q3: Is there a subsidy for a 1 MW or commercial solar power plant?
Ans: There is currently no solar plant subsidy for commercial solar power plants. However, commercial and industrial consumers can take advantage of the accelerated depreciation of 40% under the Income Tax Act, Section 32. Additionally, net metering or open access arrangements allow businesses to reduce their electricity costs significantly.
Q4: How long does it take to receive the solar subsidy?
Ans: The solar plant subsidy is transferred directly to the consumer’s bank account after the DISCOM authorizes the application. The timing of the DISCOM approval varies but it typically takes 30 working days after the DISCOM receives the commissioning certificate on the National Portal.
Q5: Can I apply for the solar subsidy if I already have an established solar power plant?
Ans: This solar plant subsidy scheme is only available for new residential rooftop solar power plants. The same house is eligible for only one solar subsidy application.
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